Status of Verification Agencies – Don’t get a Rating now! – Newsletter October 2007

Status of Verification Agencies – Don’t get a Rating now!

The rating agency accreditation process is still moving slowly. SANAS the accreditation body have not accredited any agencies as yet. SANAS also believe the process is still likely to take some time. They did not give any specific dates which could mean that the accreditation of Rating Agencies will only be finalised next year.

Fortunately for businesses this should not stop them from starting the rating process. In order for companies to get a rating they need to do a fair amount of preparation work. This work includes collecting documents and creating their own internal scorecard along with achievable targets.

Something we see far too often is a company that requires a rating, but has done no work on their scorecard gets a non compliant rating. Only after the rating do they realise how many points they have lost. Why ask an unaccredited agency to give them a scorecard showing they are non-compliant?

There is no point in getting a rating unless you have done the groundwork first. What can companies do to avoid a low BEE Scorecard Rating?

Follow the 10 step process including education, evaluation, calculation, collection of documentation.

Announcing the BEE Expert Group

One of the biggest challenges facing people trying to implement BEE in their organisations or for their clients is the lack of information available. Yes, the codes are out, but there is still a lot of confusion about how to interpret them.

A case in point is our recent discussions over verification agencies. Everybody seemed to have an opinion – but there was no real comment from the dti, or SANAS. It had to be left up to us to try to interpret the codes. We know that many people, businesses, consultants, even verification agencies are still unsure over this issue.

There are hundreds more questions we all ask, ranging from how to finance a BEE deal to evaluating job and management positions to enterprise development and socio-economic development.

In response to many requests and a suggestion from dti we are happy to announce the launch of the BEE Expert Group. This membership group will try to find answers to the BEE questions that we all need. The group will ensure that we are able to find the answers and interpretations we all need to implement BEE properly and efficiently.

The BEE Expert Group will benefit members in various ways:

  • It will create a knowledge base of BEE questions and answers that have been properly researched or even put to dti for final arbitration.

  • “Ask-the-expert” facility on the web site to access knowledgeable experts in their fields will be a mouse-click away to give responses that would normally cost thousands of rands.

  • Membership of a recognised group will add credibility to peoples’ CVs and their companies.

  • Increase awareness about the true implementation of BBBEE

The BEE Expert Group will help the enterprise and country in improving knowledge of the codes and how best to transform.

Who should join the BEE Expert Group?

  • BEE consultants and verification agencies.

  • Businesses directly or indirectly associated with BEE issues, like attorneys, accountants and HR management companies.

  • People wishing to start their own businesses to become consultants or verification agencies.

  • Businesses carrying out functions that relate to BEE, like employment equity consultants, skills development facilitators, financial consultants and enterprise development consultants.

  • Corporations that have dedicated BEE/transformation departments and want to stay up to date with latest trends and information.

  • Government departments and public entities that by law are obliged to consider BEE when doing business.

  • Small businesses that need expert information at a fraction of the cost.

Learn About BEE

Our first step in our 10 step process is to learn about BEE. Making sure that you know exactly how, where and why BEE will affect your company gives you the opportunity to implement BEE in the most cost effective way.

EconoBEE is presenting our very special full day B-BBEE seminar “The implementation of BEE” in Johannesburg on 8th November 2007. Each delegate will walk away with a better understanding of BEE, how to make BEE work for their company and ultimately prepare an implementation strategy to make sure that their BEE status remains highly competitive. We recently presented the course in Cape Town and Durban and both were highly successful.

We are also in the process of setting up an Industrial Relations Seminar. This seminar will cover all the legal documents that a business needs but does not have at their disposal. The presenter Allen De Villiers will prepare a highly detailed manual. The manual will not only contain detailed course notes but professional legal templates that can then be customised for businesses. The topics that will be covered will include case studies, correct procedures and appropriate implementation guidelines. Contact our offices for details.

Status of the Charters

The codes of good practice allow for charters.

Code 000, statement 003 of the Codes of Good Practice is clear on how charters must go through the gazetting process. The procedure is defined in paragraph 3 of the above statement.

Some of the requirements include:

1) The sector code MUST use the same definitions in respect of all beneficiaries as those used in the Codes.
2) The sector codes must fully address all the elements in the generic scorecard
3) The sector code must use the same calculation methodologies to measure compliance as those used in the codes

The same paragraph explains that the minister MUST refuse the application under certain conditions.

Sections 12 and 9 of the B-BBEE Act explains how an industry charter becomes a sector code. The first step is to gazette the proposed charter in terms of section 12. This gazetting is for information only and does not constitute a sector code. Two charters, namely the Financial Services Charter and the Construction Charter has been gazetted in terms on section 12. However, neither have been gazetted in terms of section 9, making them a sector code. Therefore at this point, no charters carry any force of the act and all enterprises should use scorecard of the codes of good practice, and not the charter – even if the enterprise is a signatory to the charter. 

Based on this no charter has yet become a sector code. The codes are quite clear that until a charter becomes a sector code the measured enterprise must use the codes of good practice if it wishes to produce a BEE Scorecard. (paragraph 4.2 of Code 000, statement 003 ).

We still encounter companies who state that they are following a charter, and will give you their scorecard when that charter is gazetted. This is wrong!

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